Concept:Depreciation of capital assets is subtracted from Gross Domestic Product (GDP) to arrive at Net Domestic Product (NDP).
Explanation:GDP measures the total market value of all final goods and services produced within a country during a given period.
However, fixed capital assets such as machinery and buildings lose value over time due to wear and tear.
This loss in value is known as depreciation or consumption of fixed capital.
NDP reflects the actual net production after accounting for this loss in capital value.
The relationship is given by:
NDP=GDP−DepreciationHence, the item subtracted from GDP to obtain NDP is depreciation, not subsidies, net indirect taxes, or net factor income from abroad.
Answer:Option B: Depreciation.